The continued precious metals rally is ultimately forcing many to get involved, with ever-changing record prices meaning forecasts are increasingly coming down to “guesswork and the round numbers game”.
This is according to Saxo Head of Commodity Strategy Ole S. Hansen. who highlights the precious metal market has witnessed an unprecedented “strong uptrend” over the past year, with gold and silver both trading up almost 40%.
“The bullish drivers throughout this period are numerous, with the most important being the risk of fiscal instability, safehaven appeal, geopolitical tensions, de-dollarisation, uncertainties surrounding the US presidential election, and now also rate cuts (not just by the Fed, but other central banks as well) reducing the cost of holding non-interest-paying investments in gold and silver,” says Hansen.
“The latter potentially supports increased demand for gold-backed ETFs from underinvested asset managers, especially in the West.”
Today (21 October), silver is making moves and with a weak AUD/USD exchange rate, has hit $50 an ounce. The precious metal is this fetching just under US$34 an ounce, which translates to just over $50/oz at a AUD/USD rate of $0.67. Silver hit an almost 12-year high of US$33.89 ($50.50), amid protracted tensions in the Middle East, as reported.
This follows fellow safehaven metal gold on 18 October marking yet another record, getting close to the US$2,700-an-ounce mark, having reached a new record in Australian dollar terms on 16 October when it punched through $4,000/oz, as reported by Mining.com.au.
Since hitting a cycle low October 2023, Hansen notes gold’s rally, as per the three attempted trendlines, continues to accelerate, highlighting the level of ‘fear of missing out’ (FOMO) and fundamental support the metal has and continues to enjoy.
In the short-term, traders will be watching incoming US data to see whether support remains strong enough for the metal to reach another fresh record, the sixth this year, he adds
“The sustained demand for investment metals during this time has, for now, triggered a breakdown in the normal inverse correlation between gold and the US dollar,” says Saxo’s Hansen.
“The latest example is the lack of a negative reaction in gold to the 2.5% gain in the Bloomberg dollar index since the beginning of September – a period that has seen the timing, speed, and depth of future US rate cuts pared back amid continued strength in US economic data.”
However, with inflation increasingly getting under control, and in some countries and regions falling back below 2%, the prospect of further rate cuts remains, Hansen adds.
On the road ahead for gold and silver, Hansen adds the continued rally is ultimately forcing many to get involved, (and) having reached record prices, the ability to forecast the next level is increasingly down to guesswork and the round numbers game.
“The next major target for gold points to US$3,000 and silver to US$35,” he says.
Navarre Minerals (ASX:NML) is one such company to capitalise on gold’s run and the road ahead with a return to the ASX in mid-November and new exploration plans for 2025.
In a recent interview with Mining.com.au, Managing Director James Gurry discusses fresh drill programs set to begin at the Tandarra and Stawell Corridor projects in Victoria, and a busy year ahead for Navarre as it contributes to the Victorian gold rush renaissance.
Last week, a poll among delegates from around the world attending the London Bullion Market Association’s annual gathering predicted higher prices in a year’s time for gold, silver, platinum, and palladium.
While gold is expected to rise about 10% to US$2,917.40 an ounce by late October 2025, Hansen says delegates held a strong view on silver, seeing it gain more than 40% to reach US$45 an ounce, with experts noting that industrial demand continues to drive market deficits as mine supply struggles to keep pace.
“Delegates also saw a strong 12 months ahead for platinum, predicting the price could reach US$1,147.90 an ounce, a level not seen since the first half of 2023,” he adds.
“The white metal trades historically cheap to gold, with the current ratio of 2.7 only expected to decline to 2.61 based on the above price assumptions. Like silver, analysts expect platinum prices will benefit from growing industrial demand, primarily from the renewable energy industry, and a deepening supply deficit next year.”
According to Hansen, silver depends on industrial and investment demand and has seen similar trends to bullion-backed holdings in exchange-traded funds, with ETF holdings bottoming out during Q1 2025 before staging a relatively muted recovery as prices struggled to reach fresh cycle highs.
“Hedge fund activity, meanwhile, remains much more volatile compared with the flows seen in gold, with the net long recently seeing a two-week reduction of 25%, leaving the net long at 35,000 contracts — not far above the 26,000 average seen so far this year, highlighting a market that needs a technical signal to attract fresh demand from momentum-focused funds,” Saxo’s Head of Commodity Strategy says.
Write to Adam Orlando at Mining.com.au
Images: Saxo
